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Saturday, August 13, 2011

They Got Bailed Out, We Got Sold Out: How the Banks Profit from the Lack of Jobs

Sarah Jaffe

Consumer borrowing hit its highest level since August 2007 this June; here's why that's not a good sign for the economy.……
In a consumer-dependent economy, that's a good thing, isn't it? After all, borrowers must have some confidence in their ability to pay back their debt, right? …… NOT SO FAST.
So why the jump in buying on credit, if people still don't have money to spend?
“...the most logical interpretation is that as other sources of cash are drying up – jobs, equity lines, etc. -- consumers are now turning to credit cards for basic expenses, and as credit lines become exhausted another round of defaults is in store. Some may say that cash sales are not reflected in the data, but the American way of life and the core economic engine has been plastic-based for as long as we can remember, and is not about to change anytime soon.”……….
In other words, a jump in consumer credit isn't a sign of confidence, but of desperation…..

3 comments:

I have always argued against credit card use. So many people over spend because overspending becomes easy. Americans need to throw those pieces of plastic away and live apart from the corrupt system of "lending" it fosters.

6:07U want to break away from the slave chain of credit card? It it easy for u to say because u have a job. Many people these days must make a choice of either live on the street or be slave to credit card.